EUROFER reaffirms support for EU climate neutrality objective

The European steel industry, says EUROFER, has already committed billions of euros to decarbonise its production and remains fully committed to delivering Europe's climate ambitions. Steel companies have already taken investment decisions for around 35Mt of new low-carbon steelmaking capacity by 2033. However, many of the enabling conditions promised to industry have yet to materialise.

Axel Eggert, director-general of EUROFER, commented: ‘The European steel industry is ready for deep decarbonisation, but the EU and most member states are not. It is an illusion to think the steel industry can be carbon-neutral by the end of 2033 based on the current ETS and CBAM frameworks alone. Without affordable clean electricity, hydrogen infrastructure and greater scrap access, the transition cannot happen at the pace envisaged."

EUROFER has warned that electricity prices remain around twice the level needed for European industry to compete internationally, while renewable hydrogen remains scarce and several times above the target price of €2/kg. Carbon leakage risks persist across both domestic and export markets, including in downstream sectors. As a result, 10 to 15Mt of planned low-carbon steelmaking capacity have already been delayed or put on hold because the business case for investment has weakened.

EUROFER stressed that the ETS remains the cornerstone of the EU's climate policy and an essential investment signal. However, carbon pricing alone cannot deliver industrial transformation. The ETS review must therefore be accompanied by internationally competitive electricity prices of around €50/MWh, affordable renewable hydrogen, effective carbon leakage protection, stronger lead markets, increased public funding and greater availability of ferrous scrap.

"The ETS must continue to reward companies investing in decarbonisation while ensuring Europe remains an attractive place to manufacture," Eggert added. "The European Steel and Metals Action Plan points in the right direction, but it must now be fully implemented. The promise to make 20Mt of clean hydrogen available by 2030 looks clearly unachievable today, and the revision of electricity markets has been a lost opportunity. Why is a fossil-fuel power plant still setting electricity prices when renewable electricity is already cheaper? Unless these structural flaws are addressed, the ETS risks reducing emissions through deindustrialisation rather than through investment and innovation."

Against this background, EUROFER calls for a significantly slower phase-out of free allocation for CBAM sectors from 2028 onwards, in particular until 2030-32, recognising that the conditions in many parts of Europe have simply not yet been provided. The association also calls for the current methodology governing the hot metal benchmark to be extended beyond 2030, providing predictability for companies investing in low-carbon steelmaking and incentivising investment in hydrogen-ready technology such as direct reduced iron. Furthermore, the association also reiterates the need for a structural export solution for CBAM sectors and downstream industries to ensure European producers remain competitive in global markets while preventing carbon leakage.

Finally, EUROFER calls for a significantly greater share of ETS revenues to be reinvested in industrial decarbonisation. "According to the European Commission's own figures, less than 5% of ETS auction revenues managed by member states are invested in industrial decarbonisation," Eggert concluded. "If Europe wants to accelerate the transition, more of these revenues must be channelled back into the sectors making the investments."